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Comment by danjoc | Hacker News Reader

Why does the 6th largest oil exporter in the world need a $76M loan paid?

Edit: Downvotes? Legitimate question guys. Can someone explain how that works?

> Edit: Downvotes?

This breaks the site guidelines. You've done that a lot and we've had to warn you a lot. Please read https://news.ycombinator.com/newsguidelines.html and follow them if you want to keep commenting here.

I legitimately don't see which guideline this violates and I thought it was a good question, even if it turns out that the case for paying off the debt is strong.

The offending element is quoted: commenting on downvotes violates the guidelines.

Probably this one:

> Please don't comment about the voting on comments. It never does any good, and it makes boring reading.

>This breaks the site guidelines.

"Please don't comment about the voting on comments. It never does any good, and it makes boring reading."

I found the replies to and discussion of my question informative. It seems others did too.

https://news.ycombinator.com/item?id=16155099

That discussion wouldn't have taken place if I didn't ask about the downvotes. The post was at -2 in minutes when I asked "Downvotes?" and it is now at 3. I don't doubt that I would have been flag killed by people questioning my sincerity had I not made the edit.

I have to wonder if you are enforcing the spirit of the guidelines or selectively enforcing it because you don't like positions I've stated in the past?

FWIW, I've pointed out the guidelines to new users who dominate a topic with top voted generic naval grazing and taken the downvotes in stride.

https://news.ycombinator.com/item?id=16079626

We don't remember or care what positions you've stated in the past. The only thing we care about is whether accounts have a history of breaking the site guidelines. It's great that you know what they are and want to abide by them. That should make any problems easy to fix.

"Downvotes?" is simply unnecessary, and that's the spirit of the guideline.

I see nothing wrong with you adding: "Legitimate question guys. Can someone explain how that works?"

It's also the 7th largest country in the world, and proportionally one of the poorest in the world, with almost 200 million people living there. Being the 6th largest oil exporter along-side the global political impotence, corruption, and poverty of the government and its people doesn't mean a huge amount.

Wikipedia gives 2.231 million barrels exported per day for Nigeria in 2013. At $50 per barrel this amounts 40 billion Dollar per year. I have no idea what the profit margins are but at 10 % this yields only 4 billion Dollar in profits per year which seems rather little to me, especially given that it is the 6th largest oil exporter. So 76 million Dollar would be 1.9 % of the annual profits from oil exports, not much but also not negligible. But I think I must have committed an error somewhere, those 4 billion Dollar just look too tiny to me.

$40B / year actually seems to be a high estimate for revenue: http://www.worldstopexports.com/worlds-top-oil-exports-count...

This has $27B in 2016, which is a 73% drop from 2012. You're probably right that it's a significant chunk of money for them, especially when they've recently lost 3/4s of their market share.

According to this,

http://www.thisdaylive.com/index.php/2016/06/18/wsj-nigerias...

Nigeria charges $4.11 per barrel in taxes. So I guess they get that $4B in tax revenue. 1.9% of oil tax revenue is not negligible, but I would think Nigeria would have more national pride than accept. Like Bolivia with Bill Gate's chickens.

Anyway, by GDP, Nigeria is 27,

https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nomi...

>I have no idea what the profit margins are but at 10 %...

Profit margins do not give the correct picture, which is rather complex, and involves royalties, multiple layers of taxation, "production sharing agreements, etc.

A good way to look at this is to take production costs (around US$ 20-25 per barrel in Nigeria) from the oil price, giving a margin of say $30/bbl. This should be applied to the entire production, not just the exports, since the country would need to import the oil for domestic needs if it did not produce it. Furthermore, a part of the production costs is internal spending, but there are also profits repatriated, so to keep things simple let's make the rough assumption that these two are roughly equal... this gives the benefits from oil production (at 2.7 mmbbl/d) at about US$80 million per day, or about $30 billion per year.

Because most of the oil and international aid money end up in the pockets of Nigeria's politicians.

Your question prompted me to read further on this. You got my upvote.

Nigeria was in a recession and exited a few months back per [12]. This bbc video tries to answer the question of why the recession happened [13]

The 2017 budget has N7.3 Trillion expenses with N4.94 Trillion revenue (of which oil revenue is N1.99 Trill)and a deficit of N2.3 Trillion. The oil revenue is not near enough. A good portion of their expenses looks to be capital expenditures (infrastructure and security) and debt servicing. "In 2017, debt servicing is projected to increase by 22 percent, which is above the current inflation level, indicating a real increase in the country’s debt burden as the FG plans to increase borrowings. " [0]

The deeper reasons might be the history - civil war, dictatorships, communal violence over decades including an insurgency and concomitant vicious cycle and corruption. Things look to be getting better.

Poverty is huge. [1] mentions 33% as below the poverty line ($1.90/day per [8]). India where I'm from as a comparison has 12.4% per [10]. Huge inflation - 9% in 2015 per [1] but now at 16% per [11]

[2] mentions three causes for poverty in Nigeria - income equality, ethnic conflict and political instability.

Civil war right after independence led to a dictatorship [9]. The oil boom in the 70s increased the govt's (dictatorship's) money but "did little to enhance its political and administrative capacity, but did increase incomes and the number of jobs that the governing elites could distribute to their clients". [6]

Looks like the return to democracy in 1999 (Fourth Nigerian Republic [3]) is when things started to turn for the better with civilian rule. Still with lots of violence [4] and a religious insurgency by Boko Haram at least until Dec 2015 ("technically defeated") [5]. Existing poverty is itself mentioned as as a cause for the rise of Boko Haram and they also made things much, much worse - "roughly 10,000 deaths since 2011 and roughly 2.6 million displaced Nigerians" (and more economic impact) [6]. Corruption seems to be widespread with scams listed till 2015[7].

The 2018 proposed budget tries to reduce the deficit and forecasts a 40% growth of the non-oil revenue (though many of the expenditure items have a similar growth). [14]

[0] https://home.kpmg.com/ng/en/home/insights/2017/06/2017-budge...

[1] https://en.wikipedia.org/wiki/Economy_of_Nigeria

[2] https://en.wikipedia.org/wiki/Poverty_in_Nigeria

[3] https://en.wikipedia.org/wiki/Fourth_Nigerian_Republic

[4] https://en.wikipedia.org/wiki/List_of_massacres_in_Nigeria

[5] https://en.wikipedia.org/wiki/Boko_Haram

[6] https://en.wikipedia.org/wiki/Economic_history_of_Nigeria#Bo...

[7] https://en.wikipedia.org/wiki/Corruption_in_Nigeria

[8] https://en.wikipedia.org/wiki/Poverty_threshold

[9] https://en.wikipedia.org/wiki/History_of_Nigeria#First_perio...

[10] https://en.wikipedia.org/wiki/Poverty_in_India

[11] https://tradingeconomics.com/nigeria/inflation-cpi

[12] https://www.reuters.com/article/us-nigeria-gdp/nigerias-econ...

[13] http://www.bbc.com/news/av/world-africa-37230696/nigeria-in-...

[14] https://www.pwc.com/ng/en/assets/pdf/pwc-2018-nigerias-budge...

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